Correlation Between Aqr Long-short and Otter Creek
Can any of the company-specific risk be diversified away by investing in both Aqr Long-short and Otter Creek at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Aqr Long-short and Otter Creek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqr Long Short Equity and Otter Creek Longshort, you can compare the effects of market volatilities on Aqr Long-short and Otter Creek and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Aqr Long-short with a short position of Otter Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Long-short and Otter Creek.
Diversification Opportunities for Aqr Long-short and Otter Creek
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aqr and Otter is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Long Short Equity and Otter Creek Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otter Creek Longshort and Aqr Long-short is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Aqr Long Short Equity are associated (or correlated) with Otter Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otter Creek Longshort has no effect on the direction of Aqr Long-short i.e., Aqr Long-short and Otter Creek go up and down completely randomly.
Pair Corralation between Aqr Long-short and Otter Creek
Assuming the 90 days horizon Aqr Long Short Equity is expected to generate 0.87 times more return on investment than Otter Creek. However, Aqr Long Short Equity is 1.15 times less risky than Otter Creek. It trades about 0.18 of its potential returns per unit of risk. Otter Creek Longshort is currently generating about 0.05 per unit of risk. If you would invest 1,040 in Aqr Long Short Equity on August 29, 2024 and sell it today you would earn a total of 598.00 from holding Aqr Long Short Equity or generate 57.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aqr Long Short Equity vs. Otter Creek Longshort
Performance |
| Timeline |
| Aqr Long Short |
| Otter Creek Longshort |
Aqr Long-short and Otter Creek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqr Long-short and Otter Creek
The main advantage of trading using opposite Aqr Long-short and Otter Creek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Long-short position performs unexpectedly, Otter Creek can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Otter Creek will offset losses from the drop in Otter Creek's long position.| Aqr Long-short vs. Neuberger Berman Long | Aqr Long-short vs. Neuberger Berman Long | Aqr Long-short vs. Pimco Rae Worldwide |
| Otter Creek vs. Boston Partners Global | Otter Creek vs. Asg Managed Futures | Otter Creek vs. Pimco Trends Managed | Otter Creek vs. Aqr Long Short Equity |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Correlations module to find global opportunities by holding instruments from different markets.
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